SETTLEMENT AGREEMENT AND MUTUAL RELEASE Between California-American Water Company & County of Monterey and Monterey County Water Resources Agency regarding Regional Desalination Project

ABSTRACT: The SETTLEMENT AGREEMENT AND MUTUAL RELEASE between California-American Water Company and the County of Monterey and Monterey County Water Resources Agency regarding the terminated Regional Desalination Project is embedded. HIGHLIGHTS OF THE SETTLEMENT AGREEMENT AND MUTUAL RELEASE document are presented. Links to RELATED NEWS ARTICLES are provided.

Settlement Agreement and Mutual Release Between CAW and County 2012

SETTLEMENT AGREEMENT AND MUTUAL RELEASE

HIGHLIGHTS OF SETTLEMENT AGREEMENT AND MUTUAL RELEASE

SETTLEMENT AGREEMENT AND MUTUAL RELEASE

This Settlement Agreement and Mutual Release ("the Agreement") is made and entered into this 4th day of December, 2012 ("Execution Date") by and between the California-American Water Company, a California corporation and regulated public utility ("CAW"), the County of Monterey, a political subdivision of the State of California ("County"), and the Monterey County Water Resources Agency ("Agency"), a duly constituted water resources agency created pursuant to the Monterey County Water Resources Agency Act (the "Agency Act"), each of whom may be referred to hereinafter as a "Party" and all of whom are at times collectively referred to hereinafter as the "Parties,"

Obligations of CAW.

A. On the Approval Date, sums owed by the Agency to CAW pursuant to the Reimbursement Agreement and the CAW Credit Line Agreement, together with any and all interest or charges accrued thereon, shall be forgiven. On the Execution Date, the total amount owed by the Agency under the Reimbursement Agreement and CAW Credit Line Agreement, excluding accrued interest, is $1,918,033.58. That sum, which is a component of Settlement Costs as defined in Paragraph 1, will continue to accrue interest, as provided in Paragraph 11, from the Execution Date until the Settlement Costs are transferred to the Balancing Account, as provided in Paragraph 11.

B. Within 30 days after the Approval Date, CAW shall pay the Agency the sum of $779,967.47.

C. Within 30 days after the Approval Date, CAW shall deposit the sum of $718,315.44 into a special trust account maintained by the Monterey County Auditor-Controller ("Trust Account"), which shall function as an escrow account. Subject to Paragraph 4E, below, all funds not withdrawn shall remain on deposit in the Trust Account until the Parties agree to the withdrawal of funds from the Trust Account or until such time as the CPUC approves CAW's request to recover any funds designated to be withdrawn from the Trust Account, as set forth in Paragraph 4D, below. Any interest accruing on the funds in the Trust Account shall be paid to CAW at the close of escrow. The Agency may not withdraw funds from the Trust Account in excess of the sum deposited by CAW.

The County and the Agency shall act expeditiously and in good faith and offer reasonable support to CAW for timely completion of the MPWSP. This support shall include cooperating with CAW in processing applications, not necessarily limited to the following:

(i) Coastal Development Permit from the California Coastal Commission.

(ii) NPDES Permit(s) from the Regional Water Quality Control Board.

(iii) State Lands Commission review and approval.

(iv) Outfall Capacity Agreement with Monterey County Water Pollution Control Agency.

(v) California Public Utilities Commission approval.

(vi) Water Board grant of State Revolving Funds for the MPWSP.

(vii) Determination of CAW compliance with Water Board Order 95-10 and the CDO.

County Ordinance Preemption. The October 25, 2012, "Decision Declaring Preemption of County Ordinance and the Exercise of Paramount Jurisdiction," issued in CPUC Application 12-04-019 ("the CPUC Decision"), finds the Ordinance is preempted by the CPUC.  Although the CPUC Decision is final and binding upon CAW, the Agency and all parties to Application 12-04-019, nothing in this Agreement shall be construed as preventing the Agency or the County from seeking to preserve local control over water issues in Monterey County by seeking rehearing or appellate review of the CPUC Decision. However, regardless of the outcome of any such challenge, the CPUC Decision shall remain final and binding on the Parties with regard to this Agreement and the MPWSP. The Ordinance shall not apply to CAW or the MPWSP. The County shall dismiss with prejudice the complaint in County of Monterey v. California-American Water Company, San Francisco Superior Court Case No. CGC-12-521875 within 10 days following the Execution Date.

Recovery of Settlement Costs. Upon CPUC approval of this Agreement and performance of the CAW obligations with respect to the Settlement Costs, the Settlement Costs will be transferred to the Balancing Account for recovery from customers through the 15% monthly surcharge approved by the CPUC in Decision No.11-09-039 or through such other recovery mechanism as may be approved by the CPUC. The principal amount due to CAW under the CAW Credit Line Agreement will continue to accrue interest after the Execution Date at the rate authorized under the CAW Credit Line Agreement and the principal amount due to CAW under the Reimbursement Agreement will continue to accrue interest after the Execution Date at the rate authorized for the Reimbursement Agreement, pursuant to CPUC Decisions Nos.1 0-08-008 and 11-09-03 9. On and after the date the Settlement Costs are transferred to the Balancing Account they will earn allowance for Funds Used During Construction at the rate of 4%, pursuant to CPUC Decision No.11-09-039 or at such other rate as may be approved by the CPUC.

RELATED NEWS ARTICLES

News Blog

County and Cal Am Reach Settlement on Desal Project

By Sara.Rubin December 4, 2012

News Blog
Cal Am Owed $8.2 Million for Defunct Desal Project 
By Kera.Abraham March 1, 2012

Monterey County, Cal Am reach financial agreement on failed desal project 
Agreement to include conditions for desal project By JIM JOHNSON Herald Staff Writer 12/04/2012